《Toyo Keizai ONLINE column currently available》Patience is required to win in investing

Good morning, this is Matsushita.

Every Saturday, we bring you a column on themes related to investing.

Today's theme is “Patience.”

Investing absolutely requires patience.

However, many individual investors do not notice this important fact,

and repeat buying and selling without any patience at all.

As a result, as you know, it becomes a mountain of losses.

In other words, from another perspective,

investing can win if you can be patient.

Patience may seem painful, but

if you understand that “that is why you win,”

it will not be painful but become a pleasant form of patience.

Understand that money does not simply increase without any patience,

and please be patient properly.

【Column】 Makoto Matsushita’s Investment Inquiry

Ep. 179 “Patience”

In investing, patience is necessary. It includes patience for entries and

patience for exits. Investors, unable to be patient,

when they see rising markets or stocks without waiting for the right chance,

think, “If I don’t buy now I won’t make a profit,” and immediately jump in and buy.

Often, such purchases end up at a high price,

and either fail to generate meaningful profits or incur large unrealized losses

and become a hold with losses. This happens because they cannot wait for a proper opportunity.

For exits, there are2 kinds of patience: patience for taking profits and patience for stopping losses. Many investors fail to have enough patience to extend profits, and secure small gains.

Afterwards, seeing the price rise sharply from the profit-taking price,

they regret themselves. This is because they cannot practice exit patience.

On the other hand, many investors, when the position they hold starts to incur losses,

try to endure until the price returns to its original level. For some reason, they decide to endure just this part. However, since losses have occurred,

the movement moves in a direction that the investor did not intend, and if that movement forms a trend, the price

will not return to the original and the losses will continue to grow.

The days of investors who fall into that situation are brutal, as losses continue to spread,

they become stunned, lose composure, and daily life begins to collapse. Then,

when they reach a point where the loss is truly unbearable, they finally cannot endure it and

they rush to close positions and realize the loss, hoping to escape it.

Many investors who have had this experience leave the investment world and never return.

Investing always requires patience. However, unfortunately, human common emotions are not suited for investing patience. If you understand this,

instead of common emotions, base your approach on theory and verification, and cultivate patience after analysis.

This should be patience for entry and patience for taking profits. There is no patience required for losses.

You simply finish at the appropriate point.